Hormel Foods Corp
NYSE:HRL
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Intrinsic Value
The intrinsic value of one HRL stock under the Base Case scenario is 35.3 USD. Compared to the current market price of 30.67 USD, Hormel Foods Corp is Undervalued by 13%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
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Hormel Foods Corp
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Fundamental Analysis
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Hormel Foods Corporation, a stalwart in the consumer staples sector, has built a legacy of nourishing families with a diverse portfolio of products that stretches across various categories, including meats, deli items, and snacks. Founded in 1891, Hormel began its journey as a small meatpacking company in Austin, Minnesota, and has since evolved into a multinational powerhouse renowned for its innovation and commitment to quality. Investors are often drawn to Hormel for its resilient performance, consistent dividend payouts, and strong brand recognition, with flagship products like Spam, Hormel Chili, and the Jennie-O turkey brand, ensuring that it maintains a robust foothold in the competit...
Hormel Foods Corporation, a stalwart in the consumer staples sector, has built a legacy of nourishing families with a diverse portfolio of products that stretches across various categories, including meats, deli items, and snacks. Founded in 1891, Hormel began its journey as a small meatpacking company in Austin, Minnesota, and has since evolved into a multinational powerhouse renowned for its innovation and commitment to quality. Investors are often drawn to Hormel for its resilient performance, consistent dividend payouts, and strong brand recognition, with flagship products like Spam, Hormel Chili, and the Jennie-O turkey brand, ensuring that it maintains a robust foothold in the competitive food industry.
Hormel’s strategic focus on expanding its product lines and entering new markets has positioned it well for future growth. The company's commitment to sustainability and wellness aligns with the evolving consumer trends towards healthier eating, providing additional avenues for expansion and investment returns. As Hormel embraces modern food trends and continues to leverage its heritage of reliability, it remains poised to adapt and thrive in a rapidly changing environment. For investors, Hormel not only offers the stability of a dividend aristocrat but also the potential for growth as it navigates the complexities of the global food market.
Hormel Foods Corporation is a diversified global food company with several core business segments that contribute to its overall revenue and strategic objectives. The main segments include:
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Meat and Food Products: This is the largest segment, which includes the production of various meats such as pork, turkey, and beef. Key brands under this segment include Hormel, Jennie-O, and Applegate. Products range from fresh meats to processed items like bacon, deli meats, and packaged foods.
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Refrigerated Foods: This segment focuses on the manufacturing and marketing of refrigerated food products, including ready-to-eat meals, shelf-stable foods, and snacks. Hormel operates several well-known brands in this area, such as Hormel Chili, Spam, and Dinty Moore.
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International & Other: This segment encompasses Hormel’s operations outside of the United States and includes its international sales of meat and food products. Hormel seeks to expand its global footprint and serve diverse markets.
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Retail: Hormel serves consumers through grocery and retail outlets, providing various branded products. This includes both fresh and processed items catering to household needs.
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Foodservice: Hormel has a dedicated division serving the foodservice industry, providing products to restaurants, institutions, and food distributors. This segment includes customized product offerings that meet the specific needs of chefs and large-scale food operations.
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Nutra: Hormel is also involved in the health and wellness sector through its investments in protein-based functional foods and supplements. This segment focuses on nutrition-related products that cater to health-conscious consumers.
Hormel Foods continuously seeks innovation within these segments, focusing on sustainability and evolving consumer preferences, which reflect the trends in the food industry.
Hormel Foods Corp has several unique competitive advantages that set it apart from its rivals in the food processing and packaged goods industry:
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Diversified Product Portfolio: Hormel offers a broad range of products, including meats, packaged meals, snacks, and plant-based items. This diversification allows the company to appeal to various consumer preferences and reduces dependency on any single product line.
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Strong Brand Recognition: Hormel owns several well-known brands, such as Spam, Jennie-O, and Skippy. These established brands have strong customer loyalty, which enables the company to maintain pricing power and market share.
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Innovative Product Development: Hormel has a track record of innovation, continually launching new products to meet changing consumer tastes, such as healthier options, convenience foods, and plant-based alternatives. Their investment in R&D helps to stay ahead of market trends.
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Strategic Acquisitions: Hormel has successfully integrated various acquisitions to expand its product lines and market reach. For instance, its acquisition of Planters expanded its snacking segment, tapping into the growing demand for snack foods.
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Supply Chain Efficiency: Hormel's effective supply chain management and vertical integration, particularly in meat production, help to ensure consistent quality, cost efficiency, and reliability in sourcing raw materials.
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Sustainable Practices: With increasing consumer focus on sustainability, Hormel's commitment to responsible practices, such as reducing waste and improving animal welfare, enhances its brand image and appeals to eco-conscious consumers.
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Marketing and Distribution Networks: Hormel has established strong marketing and distribution channels that allow it to reach a wide range of customers efficiently, from grocery stores to food service providers.
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Global Presence: Hormel operates in numerous countries, allowing it to mitigate risks associated with regional economic fluctuations and tap into international market opportunities.
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Financial Strength: Hormel Foods has a robust financial position, which allows for investments in marketing, innovation, and potential acquisitions, ensuring long-term growth and adaptability in a competitive landscape.
These competitive advantages help Hormel Foods to maintain a strong position in the market and to effectively respond to both challenges and opportunities in the food industry.
Hormel Foods Corp faces several risks and challenges in the near future, which can impact its operations and profitability. Here are some key areas to consider:
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Commodity Price Fluctuations: Hormel's business is significantly affected by the prices of raw materials such as meat, grains, and other food inputs. Volatility in commodity prices can squeeze margins and affect profitability.
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Supply Chain Disruptions: Ongoing global supply chain challenges, including logistical issues and labor shortages, can impact the company's ability to produce and distribute products efficiently.
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Regulatory Changes: The food industry is heavily regulated, and changes in regulations related to food safety, labeling, and environmental standards can create compliance costs and operational challenges.
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Consumer Preferences: Shifts in consumer trends towards plant-based diets and health-conscious eating can affect demand for Hormel’s traditional meat products. The company will need to adapt its product offerings to meet evolving consumer preferences.
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Competition: Hormel faces intense competition from other food producers and brands, which may lead to pricing pressures and market share erosion if the company fails to innovate and differentiate its products.
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International Markets: Expanding into international markets presents risks related to political, economic, and currency fluctuations, as well as different regulatory requirements and consumer tastes.
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Food Safety and Quality Issues: Any incidents related to food safety or product recalls can severely damage the brand’s reputation and lead to significant financial repercussions.
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Economic Conditions: Changes in the broader economic environment, including inflation, interest rates, and consumer spending patterns, can impact sales volumes and profitability.
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Technological Changes: The rise of e-commerce and advances in food technology require Hormel to continually invest in technology and adapt its business model in order to remain competitive.
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Sustainability and Environmental Concerns: Increased focus on sustainability and climate change may require Hormel to modify operations and sourcing strategies, which could involve additional costs or challenges.
Addressing these risks effectively will be key for Hormel Foods Corp to sustain its growth and maintain its competitive position in the marketplace.
Revenue & Expenses Breakdown
Hormel Foods Corp
Balance Sheet Decomposition
Hormel Foods Corp
Current Assets | 3B |
Cash & Short-Term Investments | 561.9m |
Receivables | 727.1m |
Other Current Assets | 1.7B |
Non-Current Assets | 10.1B |
Long-Term Investments | 680.4m |
PP&E | 2.2B |
Intangibles | 6.7B |
Other Non-Current Assets | 600.1m |
Current Liabilities | 1.3B |
Accounts Payable | 675.2m |
Accrued Liabilities | 607.8m |
Other Current Liabilities | 26.7m |
Non-Current Liabilities | 3.9B |
Long-Term Debt | 2.9B |
Other Non-Current Liabilities | 1.1B |
Earnings Waterfall
Hormel Foods Corp
Revenue
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12B
USD
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Cost of Revenue
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-10B
USD
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Gross Profit
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2B
USD
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Operating Expenses
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-1B
USD
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Operating Income
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1B
USD
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Other Expenses
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-222.9m
USD
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Net Income
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780.8m
USD
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Free Cash Flow Analysis
Hormel Foods Corp
USD | |
Free Cash Flow | USD |
Hormel Foods delivered a solid third quarter with $2.9 billion in net sales and better-than-expected earnings. Key brands like Black Label bacon, Jennie-O lean ground turkey, and SPAM showed strong performance. Foodservice continued its growth, marking its fifth consecutive quarter of year-over-year volume increases. Challenges included lower whole bird turkey sales and contract manufacturing issues. Despite these, Hormel maintained effective cost management and confirmed its full-year net sales guidance at $11.8 billion to $12.1 billion, with adjusted earnings per share between $1.57 and $1.63. The company remains committed to dividend growth and strategic investments.
What is Earnings Call?
HRL Profitability Score
Profitability Due Diligence
Hormel Foods Corp's profitability score is 50/100. The higher the profitability score, the more profitable the company is.
Score
Hormel Foods Corp's profitability score is 50/100. The higher the profitability score, the more profitable the company is.
HRL Solvency Score
Solvency Due Diligence
Hormel Foods Corp's solvency score is 62/100. The higher the solvency score, the more solvent the company is.
Score
Hormel Foods Corp's solvency score is 62/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
HRL Price Targets Summary
Hormel Foods Corp
According to Wall Street analysts, the average 1-year price target for HRL is 32.7 USD with a low forecast of 28.28 USD and a high forecast of 36.75 USD.
Dividends
Current shareholder yield for HRL is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
HRL Insider Trading
Buy and sell transactions by insiders
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Profile
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Description
Hormel Foods Corp. engages in the production of meat and food products. The company is headquartered in Austin, Minnesota and currently employs 20,000 full-time employees. Its segments include Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. The Grocery Products segment consists primarily of the processing, marketing, and sale of shelf-stable food products sold predominantly in the retail market, along with the sale of nutritional and private label shelf-stable products to retail, foodservice, and industrial customers. The Refrigerated Foods segment consists primarily of the processing, marketing, and sale of branded and unbranded pork, beef, and poultry products for retail, foodservice, deli, convenience store, and commercial customers. The Jennie-O Turkey Store segment consists primarily of the processing, marketing, and sale of branded and unbranded turkey products for retail, foodservice, and commercial customers. The International & Other segment includes Hormel Foods International, which manufactures, markets, and sells Company's products internationally.
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The intrinsic value of one HRL stock under the Base Case scenario is 35.3 USD.
Compared to the current market price of 30.67 USD, Hormel Foods Corp is Undervalued by 13%.